By Vivienne Russell
21 August 2009
The public finances have sunk to a level far worse than the government expected, according to latest figures.
Official statistics published on August 20 showed a sharply deteriorating picture of fiscal health.
Public borrowing rose to £8bn in July 2009 compared with a surplus of £5.2bn in July last year. Public sector net debt stood at 56.8% of gross domestic Product at the end of July, compared with 43.5% at the same time last year.
Declining tax receipts meant the public sector recorded a deficit on current budget of £5.1bn in July 2009, compared with a surplus of £7.8bn in the same month in 2008.
The independent Institute for Fiscal Studies highlighted the collapse in Corporation Tax and VAT receipts, which fell by £3.8bn and £3.6bn respectively to two thirds of their July 2008 level.
Gemma Tetlow, senior research economist at the IFS, said: ‘[Tax] receipts overall are shrinking more quickly so far this year than the Treasury predicted they would do in the Budget over the year as a whole.’
A backdrop of ongoing spending since April meant borrowing had been three times higher than over the same period last year, she said, again outstripping Treasury forecasts.
Tetlow added: ‘There are some good reasons, however, to expect that revenues will perform more strongly over the coming months, not least the reversal of the VAT cut schedules for the end of 2009.’
21 August 2009
The public finances have sunk to a level far worse than the government expected, according to latest figures.
Official statistics published on August 20 showed a sharply deteriorating picture of fiscal health.
Public borrowing rose to £8bn in July 2009 compared with a surplus of £5.2bn in July last year. Public sector net debt stood at 56.8% of gross domestic Product at the end of July, compared with 43.5% at the same time last year.
Declining tax receipts meant the public sector recorded a deficit on current budget of £5.1bn in July 2009, compared with a surplus of £7.8bn in the same month in 2008.
The independent Institute for Fiscal Studies highlighted the collapse in Corporation Tax and VAT receipts, which fell by £3.8bn and £3.6bn respectively to two thirds of their July 2008 level.
Gemma Tetlow, senior research economist at the IFS, said: ‘[Tax] receipts overall are shrinking more quickly so far this year than the Treasury predicted they would do in the Budget over the year as a whole.’
A backdrop of ongoing spending since April meant borrowing had been three times higher than over the same period last year, she said, again outstripping Treasury forecasts.
Tetlow added: ‘There are some good reasons, however, to expect that revenues will perform more strongly over the coming months, not least the reversal of the VAT cut schedules for the end of 2009.’
